17.07.2019: EUR likely to drop to $1.10 (EUR, USD, GBP, GOLD)
The euro is suffering losses. It is most likely to continue its decline. The pound sterling is pressurized as traders start fearing the consequences of no-deal Brexit if Boris Johnson is elected.
Weak statistics from the euro area put pressure on the single currency. Investors are widely discussing the possibility of the ECB’s key rate cut and the resumption of the quantitative easing program. The euro/dollar pair was also weakened by Christine Lagarde’s nomination as the ECB chief. Traders are skeptical whether Lagarde will be able to improve the monetary policy which has been already softened so many times.
Nevertheless, the euro slightly rose after the release of the final inflation report. In June, the growth of consumer prices accelerated to 1.3%. Earlier it was reported that the figure remained at the May’s level – 1.2%. Market participants did not expect a revision of the announced data. The euro/dollar pair reacted with a corrective growth to such news.
The euro is expected to rebound slightly towards 1.1230. If it breaks through the resistance level at 1.1240, it will resume its growth. A short-term decline in the euro’s quotes is also possible. However, the EUR/USD pair failed to overcome the support at 1.12.
The British currency is likely to be an outsider among other major currencies. On Tuesday, the GBP/USD pair lost 1%. Today, it continues to edge down. The GBP/USD pair is trading at the lowest level for 2 years. A fall below the level of 1.24 looks quite possible. Some analysts assume that the pair is unlikely to recover in the near future. Versus the euro, the British currency dropped to a 2-year low. Additionally, political uncertainty and economic slowdown in the UK also weigh on the pound sterling.
The next UK Prime Minister will be appointed next week. Both candidates have declared their intention to leave the EU without a deal in order to avoid the return of a hard border in Ireland. However, Brussels is unlikely to agree upon it. Thus, there are two scenarios: Brexit without a deal or its cancellation. Ursula von der Leyen, nominated as the head of the European Commission, takes also quite a tough stance on Brexit deal.
Gold is trading with a slight decrease. The readiness of the US to start negotiations with Iran has weakened the demand for the safe-haven assets.
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